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Finance: Where are the markets now?

Legacy Phuket Gazette

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Finance: Where are the markets now? | The Thaiger

PHUKET: On April 11, Alcoa Inc (NYSE:AA) started the first quarter earnings season by reporting a lower quarterly profit (US$16 million or zero cents per share versus US$195 million or 14 cents per share a year earlier) on lower revenue (down 15 per cent) as results were hurt by low commodity prices, the strong US dollar and plant closures.

Alcoa’s results tend to be viewed as a benchmark setting the tone for the earnings season, as well as being the first company to publish their earnings. Its results can give investors a clue about the direction key industries it supplies are heading.

This time around, Alcoa’s management said they still expect aluminum demand to grow faster than supply this year, with global sales in the aerospace industry to grow in a range of six to eight per cent (as backlogs for the airline industry were cited), while global automotive production will grow between one and four per cent this year.

On the same day, French luxury goods giant LVMH posted first-quarter sales below forecasts as tourist shopping in key markets such as France and Hong Kong remained low. However, the company also stated that the US market is strong; Europe remains “well oriented except for France” (which, of course, was affected by a fall in tourism after the recent terrorist attacks); and that Asian markets are varied, but Japan “continues to progress.”

With those early earnings reports in mind, here are some other things to consider as the first quarter earnings season gets further underway:

Price action in mid-April has been very bullish as the major US indices moved higher, while emerging markets and other non-US markets helped lead global markets higher. Oil also looks to have bottomed out. These market actions, along with improving breadth, are all positive changes and bullish signs for higher stock prices.

On April 19, the S&P 500 finally broke the 2,100 mark and I am watching for it to break above the 2,150 level for an added measure of safety as there is still a chance the index will roll over again.

The beaten down small-cap Russell 2000 index has also broken out into a series of new short term highs, and closed above the 1,140 level on April 20. However, the index still needs to break above the 1,200 level for added comfort.

The technical charts for the SPDR KBW Bank ETF (NYSEARCA: KBE) and the Financial Select Sector SPDR Fund (NYSEARCA: XLF) have both begun to stabilize, but the former still has work to do to break above its previous high. Good or better than expected earnings reports from bank and financial services stocks could be enough to trigger some breakouts on technical charts for these ETFs, or the individual stocks they are invested in.

Accommodating central bank policies coupled with relative improvement in earnings may result in a breakout to new highs for major stock indices and leadership stocks during this earnings season.

Moreover, maybe earnings this season will come in better than expected; maybe oil has bottomed; maybe China is not as bad as people think; and maybe the credit markets have stabilized.

With so many ‘maybes’, it’s the price action of the major indices along with individual leadership stocks reporting their earnings that will tell us whether the stock market will just rollover again.

Likewise, all winning stocks (and ETFs for that matter) need to be hitting new highs – if not, they are probably not leadership stocks and you should probably not be invested in them.

This means conservative investors will want to give the market some room this earnings season while watching how individual stocks react to their earnings reports, before getting fully back into the market.

Don Freeman, BSME, is president of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC), based in Phuket. He has over 15 years’ experience working with expatriates, specializing in portfolio management, US tax preparation, financial planning and UK pension transfers. Call for a free portfolio review. Don can be reached at: 089-970 5795 or email: free mancapital@gmail.com.

— Don Freeman

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Governments & old media versus social media – who will win? | VIDEO

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Governments & old media versus social media – who will win? | VIDEO | The Thaiger

We look at the recent changes made by the Australian and Indian governments to except control over the world’s biggest social media platforms. India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social. There is now an open battle between the rise of social media platforms and the governments and ‘old’ media that have been able to maintain a certain level of control over the ‘message’ for the last century. Who will win?

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told. The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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The social media giants in battle with ‘old’ media and world governments | VIDEO

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The social media giants in battle with ‘old’ media and world governments | VIDEO | The Thaiger

“The rules signal greater willingness by countries around the world to rein in big tech firms such as Google, Facebook and Twitter that the governments fear have become too powerful with little accountability.”

India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social.

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The companies are also being made to publish a compliance report each month with details about how many complaints they’ve received and the action they took.

They’ll also be required to remove ‘some’ types of content including “full or partial nudity,” any “sexual act” or “impersonations including morphed images”

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told.

The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

Keep in contact with The Thaiger by following our Facebook page.

Never miss out on future posts by following The Thaiger.

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Business

Turbulence ahead for Thailand’s aviation industry | VIDEO

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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